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October 17, 2014
Strategic Buyers Turn to M&A to Fuel Growth
In a relatively slow growth economic environment, an increasing number of consumer electronics companies are pursuing M&A to
expand their brand, technological capabilities and geographic reach. In particular, emerging and rapid-growth sectors such as homeautomation/IoT have been highly active among strategic and financial investors, while slower growth markets such as 12-volt
electronics and home theater have seen M&A deals drive market share consolidation and cost-savings opportunities. Our pipeline
includes both transaction flavors and remains strong as we wind down an active year, with signs that 2015 will remain equally active.
We hope that this report serves as a useful tool for your business. As you evaluate your own opportunities, please feel free to call us at
310.478.9000 for more pointed insight.
Gary Rabishaw, Managing Director, Head of Consumer & Professional Electronics, [email protected]
Adam Abramowitz, Senior Vice President, Co-Head of Consumer & Professional Electronics, [email protected]
Recently Closed Transactions
Onkyo Acquires Pioneer Home A/V — Pioneer agreed to sell its home audio-visual business to Onkyo
Corp. in exchange for a 15% stake in the acquiror, after Baring Private Equity backed out of a three-way deal
involving the companies. As part of its ongoing strategic repositioning, the company is also spinning off its DJ
equipment business to Kohlberg Kravis Roberts & Co. for approximately $550 million. Pioneer plans to focus
on its core car electronics business, which generated 70% of net sales in the fiscal year ended March 31,
2014.
Consolidation in Radar Detection Market — Monomoy Capital, owner of Escort Inc., acquired Cobra
Electronics through a tender offer of all outstanding shares at $4.30 per share, representing roughly an 8%
premium over the pre-announcement price. The $47 million price represented 0.4x revenue and 9.0x EBITDA
multiples. After a courtship process lasting more than a year, the acquisition is most likely driven by expected
synergies and redundancies between the two market-leading companies.
Investors “Up” Jawbone Valuation — Aliph, maker of the Jawbone branded Up fitness band and
Jambox Bluetooth speaker, recently raised an additional $16 million of venture capital funding at a $3.3 billion
dollar valuation, or an implied 8x revenue multiple. The company has raised nearly $700 million of funding to
date, with plans to aggressively pursue the wearables category and challenge the Apple Watch head on.
Fellowes Expands Body Glove Brand — Fellowes Brands, primarily known for its Fellowes® branded
business machines and Bankers Box® office storage solutions, has acquired Optrix, Inc., a provider of action
sports photography accessories for iPhone. The company will integrate Optrix into its mobile accessories
division, which licenses the Body Glove brand. Terms of the transaction were not disclosed.
Rockford Adds to Brand Portfolio — Rockford Corporation, which markets and distributes products
under the Rockford Fosgate, Rockford Acoustic Design, Lightning Audio, Brax, Helix, Renegade and mObridge
brands, has agreed to acquire Crimestopper Security Products, which offers aftermarket vehicle security,
remote start systems and safety products to the 12-volt channel. The acquisition provides Rockford with a
counter seasonal product line and an additional brand to offer to its customer base.
BodyGuardz Adds Premium Brand — Mobile device accessory maker BodyGuardz acquired CruxCase,
a provider of luxury keyboard cases for iPads. The acquisition extends the BodyGuardz portfolio of products,
which currently includes screen protectors, skins, cases and earbuds.
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Home Automation / Internet of Things M&A Heats Up
Samsung Acquires SmartThings — Samsung acquired SmartThings, which provides products
and software solutions that integrate lighting products, audio systems, security systems and other
devices, for approximately $200 million. Following the acquisition, we expect SmartThings products to
replace Samsung’s current Lumen device. Samsung is also expected to focus on adding home
automation capabilities to many of its devices, such as smartphones, tablets, wearables and smart TVs.
Leviton Extends Product Reach Through M&A — Leviton, which offers intelligent security,
automation and power management solutions for commercial and residential applications, made two
notable acquisitions in Q3. In August, the company acquired ClickOn Technology, a South African
provider of home automation and remote switching products. In September, Leviton acquired BitWise
Controls, a Colorado-based provider of home automation and A/V control solutions, with a strong offering
of Android and iOS compatible graphical user interfaces. The acquisitions come as part of Leviton’s
strategy to expand its presence in the fast-moving automation market.
Atmel Enters Internet of Things — Microcontroller and touch technology solutions provider Atmel
Corporation acquired Newport Media, which provides Wi-Fi and Bluetooth solutions, from a group of
venture capital and institutional investors for $170 million, resulting in a 4x enterprise value to revenue
multiple. The purchase price includes $140 million of cash plus an earn-out of up to $30 million based on
future revenue targets over the next two years. The acquisition expands Atmel’s wireless product
portfolio and will accelerate its initiatives in low-energy Bluetooth solution, furthering its reach into the
Internet of Things market.
Industry News
Hardware is Back — Since going public in late June, GoPro’s share price has increased nearly 200%
from its initial offering price of $24, to over $70. The company continues to gain momentum following its
recent product launches that includes differentiated products for professional, prosumer and entry-level
consumer markets. Read more here.
Harman Shoots for the NBA — Harman International entered into partnership agreements to
become the official headphone, speaker and audio partner of the NBA and WNBA. The agreements
primarily focus on the JBL brand, which Harman will integrate into events and games globally. Harman
plans to bring NBA-branded headphones and portable speakers to the market by the end of 2014. Read
more here.
Amazon Reigns as Low Cost CE Retailer — According to analysis by 360pi, Amazon remained
the low-price leader in the electronics category for the 12 months trailing August 2014, despite facing
seasonal pressure from Target during the holiday season and Best Buy in the spring. The growing
competition between Amazon and Wal-Mart is evident and, given Wal-Mart’s aggressive pricing in other
categories, the price war in electronics is one to watch in the coming months. Read more here.
Further Integration at JVC and Kenwood — As part of JVC KENWOOD Corporation’s global
integration initiative, JVC Americas Corp. and Kenwood U.S.A. Corporation will merge into a single
entity, JVCKENWOOD USA Corporation, with headquarters in Long Beach, CA. Read more here.
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Publicly Traded Companies (USD Millions)
Last Twelve Months
Company
Revenue Growth
Enterprise Value / LTM
Enterprise Value
Market Cap
Revenue
Gross Margin
EBITDA Margin
1-year
3-year
Revenue
EBITDA
$584,416
$1,906
$18,283
$116,507
$591,302
$3,507
$10,771
$155,190
$178,144
$6,187
$55,158
$211,727
38.4%
20.5%
23.3%
39.5%
33.2%
0.1%
5.7%
22.7%
5.2%
(22.8%)
1.8%
2.7%
21.1%
(22.8%)
1.6%
12.3%
3.3x
0.3x
0.3x
0.6x
9.9x
NM
5.8x
2.4x
Entertainment Technology
Dol by La bora tori es , Inc.
DTS Inc.
Rovi Corpora tion
Ti Vo Inc.
$3,238
$423
$2,431
$784
$3,988
$463
$1,715
$1,394
$950
$138
$556
$443
91.4%
92.9%
81.9%
61.6%
34.5%
22.2%
35.1%
15.4%
3.4%
23.5%
19.8%
25.2%
0.4%
13.2%
(3.1%)
27.5%
3.4x
3.1x
4.4x
1.8x
9.9x
13.8x
12.5x
11.5x
Electronic Accessories
Ga rmi n Ltd.
GoPro, Inc.
Ha rma n Interna tiona l
Logi tech Interna tiona l
Turtle Bea ch Corpora tion
Skul l ca ndy, Inc.
VOXX Interna tiona l
ZAGG Inc.
$9,156
$9,535
$6,037
$1,472
$283
$175
$260
$154
$10,552
$9,455
$6,062
$1,941
$251
$219
$168
$166
$2,764
$1,034
$5,348
$2,129
$185
$215
$797
$216
55.1%
40.1%
27.4%
35.3%
28.4%
44.7%
28.5%
37.6%
26.8%
8.2%
10.3%
8.5%
4.0%
7.7%
3.8%
14.0%
3.6%
87.4%
24.4%
0.9%
(13.8%)
(17.2%)
(3.6%)
(13.7%)
0.6%
74.7%
12.3%
(3.4%)
9.0%
4.0%
8.4%
22.3%
3.3x
9.2x
1.1x
0.7x
1.5x
0.8x
0.3x
0.7x
12.4x
NM
11.0x
8.1x
NM
10.6x
8.6x
5.1x
Connected Home
Control 4 Corpora tion
Nortek Inc. (Core Bra nds )
Uni vers a l El ectroni cs
$242
$2,498
$722
$305
$1,143
$810
$138
$2,405
$555
50.8%
29.6%
29.1%
6.7%
9.5%
9.8%
16.5%
8.7%
12.4%
16.9%
6.1%
10.7%
1.8x
1.0x
1.3x
NM
11.0x
13.3x
Diversified Electronics Manufacturing
JVC KENWOOD Corpora tion
Hon Ha i Preci s i on (Foxconn)
Pa na s oni c Corpora tion
Pi oneer Corpora tion
Sha rp Corpora tion
Sony Corpora tion
$655
$39,663
$25,889
$1,466
$11,177
$18,476
$314
$46,415
$25,608
$921
$4,366
$17,987
$2,950
$131,877
$73,172
$4,732
$27,698
$74,020
26.9%
6.8%
27.4%
21.4%
18.3%
23.9%
5.4%
4.9%
8.2%
8.5%
7.8%
6.6%
3.2%
7.9%
5.9%
11.7%
18.1%
12.8%
(2.8%)
6.6%
(0.4%)
4.0%
6.2%
3.8%
0.2x
0.3x
0.4x
0.3x
0.4x
0.2x
4.1x
6.1x
4.3x
3.6x
5.2x
3.8x
Mobile Device Manufacturing
Appl e Inc.
HTC Corpora tion
LG El ectroni cs Inc.
Sa ms ung El ectroni cs
TEV / Revenue Multiples
20.0x
4.0x
16.0x
3.2x
TEV / Revenue
TEV / EBITDA
TEV / EBITDA Multiples
12.0x
8.0x
4.0x
0.0x
2.4x
1.6x
0.8x
0.0x
Mobile Device Manufacturing
Entertainment Technology
Electronic Accessories
Connected Home
Diversified Electronics Manufacturing
Market Cap Change
Past Three-Month Equity Price Performance
75%
15%
(15%)
(45%)
(75%)
50.0%
124.1%
35.6%
45%
5.9%
4.7%
5.1%
(5.2%)
(13.1%)(18.3%)
(8.7%) (10.0%)
(24.4%)
(1.3%) (6.7%) (7.7%)
(1.5%)
(17.4%)(19.6%)(22.1%)
(16.6%)
(38.2%)
3.0%
(2.2%) (3.1%) (6.2%)
(16.1%)
Source: S&P Capital IQ. Indices calculated on an equally-weighted basis and adjusted for outliers. Historical trading multiples reflect one-month trailing averages.
“NM” stands for “Not Meaningful.”
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Event Highlights
CEDIA Capital Summit
Intrepid and Stiernberg Consulting co-hosted the first-ever Capital
Summit at CEDIA EXPO, drawing numerous attendees to hear our
panels discuss M&A and capital raising trends in the industry. Some
key take-aways:

Acquirors are hyper-focused on products and technologies that are
adaptable and defensible. With rapid innovation and change, they
seek to 'future-proof' as much as possible.

When planning for an exit, sellers should be able to articulate
clearly the value they bring to each buyer. A clear message
around brand, distribution or technological synergies will heighten
interest.

Capital may be abundant, but getting funded is not a slam dunk.
Investors remain disciplined. When seeking to raise capital, be
precise on how the funds will be deployed to help your company
get to the “next level".
Intrepid Hosts “Building a Sustainable Consumer Brand in
Today’s Complex Retail Environment” at 2014 ACG LA
Business Conference
In today’s world of omnichannel competition, social media influence,
and information overload building a sustainable consumer brand is
increasingly challenging. Brands continually fight for a share of two
precious finite resources: the consumer’s mind and the consumer’s
wallet. A unique and compelling brand strategy that connects with
consumers and stirs passion can separate the winners from the
losers; the difference between being a darling or an afterthought.
Attendees at the conference heard answers to the following questions
from the founders of Sol Republic and Popchips, the CEO of Blue
Microphones, and the CEO of TSG Beauty: What differentiates
successful brands in today’s economy? How do brands compete
against the traditional ad budgets and resources of their significantly
larger global competitors? What strategies are being employed to stay
a step ahead of the competition and build sustainable brand
loyalty? How are companies managing online and offline business
models and choosing where to invest their marketing resources?
We thank our panelists: Kevin Lee, CEO and Founder of Sol
Republic; Pat Turpin, Co-Founder of Popchips; John Maier, CEO of
Blue Microphones; and Diane Miles Operating Partner and CEO of
TSG Beauty for their strategic perspective.
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Select Transactions*
*Certain transactions herein may have been executed by principals of Intrepid while at previous firms.
*
*
*
*
a portfolio company of
a portfolio company of
has been acquired by
a portfolio company of
a portfolio company of
has been acquired by
has been acquired by
has been acquired by
has been acquired by
an affiliate of
Linear Corporation,
a subsidiary of
Consumer & Professional Electronics Practice
Connected Home
Lifestyle Electronics
• Control
Systems
• Internet of
Things
• Mobile
Devices
• Lighting
• Networking
• Mobile
Accessories • Cases
• Headphones
• Home
Automation
Audio / Video
• Wearables
• Loudspeakers
• Apple/iOS
Ecosystem
• Custom Installation
• Audio Technologies
• Video Technologies
Consumer & Professional Electronics Team
● Connected Home
● Audio / Video
● Lifestyle Electronics
● Pro A/V & Musical Instruments
Gary Rabishaw
Adam Abramowitz
Managing Director
Senior Vice President
Greg Passani
Analyst
[email protected]
[email protected]
[email protected]
Pro A/V
Musical Instruments
• Studio
Monitors
• Sound
Reinforcement
• Microphones • Musical
Instruments
• Mixing
Consoles
• Live Sound
About INTREPID
Intrepid Investment Bankers is a specialty investment
bank that provides M&A, capital raising and strategic
advisory services to middle-market companies across
various industry sectors. We have a unique culture rooted
in our founders’ successful 30-year history of advising
entrepreneur and family-owned businesses, financial
sponsors and major corporations. We believe that every
company has an entrepreneurial passion that drives it and
a story that defines it. We deliver unconventional results
through our unique ability to tell each client’s story, and
drive relentless execution through senior banker
immersion in each process. We augment our international
capabilities through our membership and active
participation in M&A International Inc., an exclusive global
alliance of select independent middle-market M&A
advisory firms. Follow Intrepid IB
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